Correlation Between Putnam International and Putnam Convertible

Can any of the company-specific risk be diversified away by investing in both Putnam International and Putnam Convertible at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Putnam International and Putnam Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Putnam International Capital and Putnam Vertible Securities, you can compare the effects of market volatilities on Putnam International and Putnam Convertible and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Putnam International with a short position of Putnam Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Putnam International and Putnam Convertible.

Diversification Opportunities for Putnam International and Putnam Convertible

-0.24

Correlation Coefficient

Putnam International  Putnam Convertible

Very good diversification

The 3 months correlation between Putnam and Putnam is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Putnam International Capital and Putnam Vertible Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Putnam Vertible Secu and Putnam International is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Putnam International Capital are associated (or correlated) with Putnam Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Putnam Vertible Secu has no effect on the direction of Putnam International i.e., Putnam International and Putnam Convertible go up and down completely randomly.

Pair Corralation between Putnam International and Putnam Convertible

Assuming the 90 days horizon Putnam International Capital is expected to generate 1.15 times more return on investment than Putnam Convertible. However, Putnam International is 1.15 times more volatile than Putnam Vertible Securities. It trades about 0.18 of its potential returns per unit of risk. Putnam Vertible Securities is currently generating about -0.1 per unit of risk. If you would invest  3,769  in Putnam International Capital on December 20, 2024 and sell it today you would earn a total of  377.00  from holding Putnam International Capital or generate 10.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Putnam International Capital  vs.  Putnam Vertible Securities

Putnam International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Putnam International Capital are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Putnam International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Putnam Vertible Secu

Risk-Adjusted Performance

Very Weak

Over the last 90 days Putnam Vertible Securities has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Putnam Convertible is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Putnam International and Putnam Convertible

The main advantage of trading using opposite Putnam International and Putnam Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Putnam International position performs unexpectedly, Putnam Convertible can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Putnam Convertible will offset losses from the drop in Putnam Convertible's long position.

The idea behind Putnam International Capital and Putnam Vertible Securities pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.